The International Monetary Fund (IMF) Executive Board has approved Ghana's request for a $3 billion bailout to help the country's ailing economy.
The choice was taken on Wednesday during a meeting of the Executive Board after Ghana received finance guarantees from the Paris Club.
International media behemoths Reuters and Bloomberg stated that many sources with direct knowledge of the situation verified the approval of the three-year extended loan facility for Ghana.
On May 18, the International Monetary Fund will conduct a televised news conference to provide additional information at the conclusion of the IMF Executive Board meeting regarding Ghana's bailout request.
IMF Managing Director Kristalina Georgieva stated last Friday that the IMF Executive Board was considering approving the loan because Ghana's formal creditors had given the requisite funding assurances.
“A deal is anticipated on Wednesday. Following clearance, there would be a distribution of $600 million as a first tranche, according to Mohammed Amin Adam, minister of state for finance.
He stated that a second $600 million tranche is anticipated to be authorized following a positive first evaluation of the program, which is anticipated to take place in November or December, with the remaining funds being distributed in equal tranches of $360 million following semi-annual reviews.
According to him, the money will help Ghana reach its goal of having foreign reserves equal to three months' worth of imports by 2026 by bolstering its financial position.
The IMF and the Ghanaian government agreed to a new arrangement under the Extended Credit Facility on December 12, 2022, at the staff level.
Ghana's government was compelled to turn to the IMF because of its increasing debt crisis.
The government previously stated that it turned to the IMF for financial support because of a number of issues, including Ghana's dire debt situation, the COVID-19 pandemic, the negative consequences of the Russia-Ukraine war, the banking sector clean-up, and the energy sector's excess capacity payments.
Vice President, Dr. Mahamudu Bawumia, acknowledged that the government had few options for generating sufficient revenue in the face of the worsening economic challenges when he spoke at the launch of two new high-level information technology programs at Accra Business School at Baatson in Accra in July 2022. This ultimately led to the decision to seek assistance from the IMF.
“Ghana's fiscal and debt sustainability have gotten worse in the middle of this global crisis. Some analysts have claimed that the huge increase in the budget deficit and the debt stock cannot be attributed to government spending on its own. In actuality, they are correct.
“Covid-19 expenses by themselves were not the cause of Ghana's rising debt stock by the end of 2021. In fact, as I mentioned in my April 7th lecture, “the banking sector clean-up (GH25 billion) and the energy sector excess capacity payments (GH7 billion) were two major expenditure items in addition to COVID-19 that are crucial to understanding the evolution of the fiscal deficit and the debt stock.
The IMF agreement will promote economic growth.
In addition, President Nana Addo Dankwa Akufo-Addo expressed confidence in Ghana's cooperation with the IMF, highlighting the latter's contribution to economic stability and progress.
At the Abu Dhabi Sustainability Week in Dubai, Nana Akufo-Addo maintained his confidence in Ghana's future.
Our goal for the economy this year is a 5.6 percent GDP growth rate; therefore, we are aiming to expand the economy at a much higher rate.
In our instance, we consider our engagement with the IMF as a way to improve the likelihood of a win-win situation for the private sector and the nation by repairing our public finances over the near term and restoring credibility to our balance of payments, which has recently suffered significantly.
“I am very confident that we will come out of this stronger and more resilient economically and move closer to our objective of realizing the Ghana Beyond Aid agenda.”
